CBN and private sector donations to war economy
Another private sector donation aimed at tackling insecurity, if altruistic, is a welcome development that should be matched with improvement in the dismal state of affairs nationwide. Budgetary evidence though suggests that defence and security have rarely been lacking in funding but in countervailing value for appropriations. Therefore, besides rallying the private sector to railroad resources to common cause, the Central Bank of Nigeria (CBN) and its donors should demand more result-oriented security campaigns to avoid throwing monies at the problem than actually solving it.
An alliance of private sector players in collaboration with the apex bank recently pooled the sum of N100 billion to support Nigerian security agencies in the fight against insecurity. Similar gesture was extended at the outset of the devastating COVID-19 pandemic, with the coalition pooling over N60 billion to provide interventions, food and vaccine support to mitigate impacts of the pandemic. These private sector bigwigs, as disclosed by the Chairman of United Bank for Africa (UBA), Tony Elumelu, have now resolved to fight insecurity by providing security hardware to the security agencies. With the intervention, the coalition hopes to open up the Nigerian economy once more.
It is important to state that corporate organisations have corporate social responsibility to their operating environment. In that sense, the fresh N100 billion investment, like other precedents, is commendable. However, there is a common trend of having the CBN champion the big players’ donation in a manner that betrays altruism expected of the social responsibility. The posture affirms more than it denies that the private sector is being arm-twisted to plough back its resources to the society. Such an underhand approach is unhealthy for the image of the CBN in particular, and the country, in general. The Robin Hood phenomenon, partly so, suggests an unholy alliance or connivance between the regulator and operators, all against the general public. That symbolism is readily expressed in Nigerian banks posting huge profit margins in an economy that is in distress! Yet, if the CBN must disabuse minds, it should begin to play less frontline roles in private sector donations, and more of its regulatory functions to drive a sustainable economy in general interest.
Instead of a cash cow for free-money, the apex bank and the federal government should rather begin to see the private sector as one of the main victims of general neglect and administrative ineptitude that are prevalent in the country. Besides Nigerians that are getting murdered by insurgents daily, private businesses are at the short end of the stick of insecurity and bad economic decisions. Available data on the economic impact of violence on countries’ Gross Domestic Product (GDP) according to the Institute of Economics and Peace (IEP) in its 2021 report on the economic value of peace, showed that as much as eight per cent of Nigeria’s GDP or $132.59 billion (N50.38 trillion at N380/$1) is being impacted economically by growing violence around the country.
A large chunk of that estimate comes from the private sector that is shutting down businesses and severing distribution chains. The disruptions to the agriculture sector, currently accounting for about 26.95 per cent of the GDP, trade and manufacturing, provide a clearer picture of the ripple effects of insecurity is having on the economy and its recovery. All of these operators deserve more of compassionate policy support to salvage their businesses and economy than compulsion to cough out freebies that are hardly accounted for.
As patriotic as donating to the war economy sounds, the problem is rarely that of funding. It borders more on ill-motivation, lack of accountability, corruption and complicit negligence of the federal government to think out of the box for pragmatic solutions to the existential crisis. It is public knowledge that Nigeria has reportedly spent at least ₦6 trillion on security without making much headway in the last decade. In 2015, Nigeria’s gross military spending was $2.07 billion, which was a 12.39 per cent decline from 2014. The defence budget saw a 16.57 per cent decline in 2016 with an estimate of $1.72 billion.
This was followed by a 5.92 per cent decline in 2017 with a budget estimate of $1.62 billion. 2018 witnessed a 26.02 per cent increase with an estimate of $2.04 billion. The defence budget in 2019, however, saw a significant 8.95 per cent drop with an estimate of $1.8 billion and an estimate of $1.2 billion in 2020. With an allocation of N31.97 billion, the Nigerian Air Force took the largest share of the Ministry of Defence’s total Capital Expenditure ceiling of N120.04 billion for 2021. The Nigerian Army followed with N27.87 billion, while the Navy got N12.04 billion. In 2022, defence and security got N2.41 trillion, being 15 per cent of the budget. Though the budgetary provisions had ballooned, far more than health, education and infrastructure combined, what is the dividend?
The freewill to give back for a better society notwithstanding, the private sector can as well up the ante to demand accountability and get more pragmatic in supporting common cause. There is no justification in throwing monies at institutions, when police and other security agencies are almost fighting bare handed and barefooted in local communities. The Lagos State Security Trust Fund (LSSTF) is an example of how to complement private sector donation with value for money. It is such examples that are required nationwide to tackle insecurity from the grassroots, effectively and collectively.